Are Teachers Overpaid? A Response to Critics

It is a view as ubiquitous as it is simplistic: To improve public education, pay teachers more—a lot more. Union officials, education reformers, scholars, laypeople, and politicians of all stripes endorse this principle in one form or another.

However, as we determined in a study released Nov. 1, 2011, by the Heritage Foundation, “Assessing the Compensation of Public-School Teachers,” the average public school teacher already is paid more than what he or she is likely to earn in the private sector. Although some may well be underpaid, the typical public school teacher makes roughly $1.52 for every dollar made by a private-sector employee with similar skills.

Not surprisingly, that finding generated widespread interest, not all of it positive. In response, we published a Q&A yesterday addressing concerns about the original study. As we explain below, our results hold up, and they point to several important lessons for education reform, particularly in the areas of teacher merit pay and pension overhaul.

The mistaken view that public school teachers are underpaid is fueled by an oft-cited but misleading data point: Teachers receive lower salaries than the average college graduate.

The trouble is, college diplomas aren’t equal measures of skills valued by the labor market.

A majority of teachers go to college or graduate school to study education, an area of study frequently deemed considerably less rigorous than the typical academic field. University of Missouri economist Corey Koedel finds that, despite entering college with below-average SAT scores, “education students receive higher grades than do students in every other academic discipline.”

Instead of relying on paper educational credentials, our study analyzed salaries using more-objective measures of ability, such as SAT and GRE scores, and we found that teachers are paid salaries right around where we’d expect, given their skills as measured by these metrics. Moreover, teachers receive pensions, retiree health benefits, and vacation time far exceeding private-sector averages. This makes their total benefits roughly twice as generous as those found in private-sector jobs.

"What will not improve teacher quality are across-the-board increases in teacher pay."

In response to this evidence, critics have raised three types of objections. The first involves emotional statements about teachers. We have received hundreds of calls and emails from teachers who detail the rigors of their workday, challenge us to join them in their classrooms, and suggest that scholars at think tanks are the people who really are overpaid.

In contrast to these emotional reactions, our report is a sober, data-driven contribution to an ongoing policy discussion. Of course, the teaching profession is crucial to our society and economy. However, teachers should still receive no more and no less than fair-market compensation for their skills. Only the data can tell us whether that is happening.

A second set of criticisms is made up of inaccurate claims about our analysis. Disturbingly, misinformation has emanated from high places.

U.S. Secretary of Education Arne Duncan, for example, claimed that we counted the fringe benefits for 30-year veteran teachers rather than for the average teacher. (We used the average teacher.) Stanford education professor Linda Darling-Hammond asserted that we ignored all the extra time teachers work outside “contract hours.” (We relied on teacher self-reports for work hours.)

Substantive arguments make up the third type of criticism. For example, some critics questioned whether a teacher’s scores on standardized tests really say anything about his or her skills: Doesn’t effective teaching require much more than being able to answer SAT questions?

Teaching certainly does involve important organizational and interpersonal skills that formal tests may not capture. But these skills have wide market applications. If teachers aren’t fairly paid for their noncognitive skills, we would expect teachers who shifted to private-sector jobs to receive significant pay raises. They don’t. We have shown that the average teacher accepts a slight wage decrease upon leaving the profession.

Randi Weingarten, the president of the American Federation of Teachers, asks: “If teachers are so overpaid, then why aren’t more ‘1 percenters’ banging down the doors to enter the teaching profession? Why do 50 percent of teachers leave the profession within three to five years?”

In fact, teacher colleges nationwide regularly graduate tens of thousands more students than can possibly find teaching jobs. As Stanford University's Eric Hanushek wrote a year ago: "In 2000, 86,000 recent graduates entered into teaching, even though 107,000 graduated with an education degree the year before.”

And although turnover is high among new teachers, “the average rate of teacher turnover is very close to similar professions,” Douglas N. Harris and Scott J. Adams wrote in the Economics of Education Review in 2005.

Important policy implications follow from our findings. The most immediate: Increasing teacher contributions toward pensions and other benefits could be a reasonable approach to closing state and local budgetary shortfalls.

Even with such changes, teachers would enjoy much more generous benefit packages than their peers in the private sector. Broader pay reform requires greater flexibility to pay teachers by their effectiveness in the classroom, shifting more funds toward the best teachers.

What will not improve teacher quality are across-the-board increases in teacher pay. The fact that teachers already are compensated at levels normally reserved for workers with skills deemed more valuable implies a fundamental problem with current hiring practices. The money is there, but higher teacher quality has not come along with it.

Despite an appealing simplicity, the “pay teachers more” mantra is far from a panacea. We want better teachers and fair pay, as all reformers do. But the current compensation bonus of 50 percent above market rate has yet to improve the teacher workforce, suggesting that further across-the-board raises would have little benefit.

American public education needs deep structural reform of the teacher-compensation system. We should start with pension reform and move toward a flexible system of merit pay.

Jason Richwine is a senior domestic-policy analyst at the Heritage Foundation, in Washington. Andrew G. Biggs is a resident scholar at the American Enterprise Institute, also in Washington. They are the co-authors of the report “Assessing the Compensation of Public-School Teachers.”

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